Towards Investment in Sustainable Fisheries
TOWARDS
INVESTMENT IN
SUSTAINABLE
FISHERIES
A FRAMEWORK
FOR FINANCING THE
TRANSITION
Discussion document
TOWARDS
INVESTMENT IN
SUSTAINABLE
FISHERIES
A FRAMEWORK
FOR FINANCING THE
TRANSITION
Discussion document
Environmental Defense Fund
257 Park Avenue South
New York, NY
10010
United States of America
The Prince of Wales’s
International Sustainability Unit
Clarence House
London
SW1A 1BA
United Kingdom
Registered charity number 1127255
50in10
New Venture Fund
1201 Connecticut Ave. NW, Suite 300
Washington DC
20036
United States of America
CONTENTS
Foreword
2
Executive Summary
4
1 Introducing fisheries as investable propositions
2 Enablers of increased value
7
15
Secure tenure
17
Sustainable harvests
20
Robust monitoring and enforcement
23
3 Drivers of increased value
25
Stock health
27
Operational efficiency
30
Market value
32
4 Requirements for securing investment
36
A business case for the transition
38
Investable entities
41
Mechanisms for capturing the return
45
Risk management
50
5 Considerations for structuring the investment
54
Sources of capital
56
Combining capital to create scale and reduce risk
59
6 Conclusions
64
Annex 1: Risk
66
Annex 2: A selection of fisheries funds
70
Glossary
72
References
76
Acknowledgements
81
1
FOREWORD
We have reached a critical moment in history. There is a widening
gap between what we demand of the Earth’s natural systems and
what those systems can provide. We face a series of important
decisions at the heart of which lies a crucial choice: whether to
carry on with business as usual or change our practices in order
to sustain the natural capital that, in turn, sustains us.
We now have the opportunity to address the increasingly urgent
matters of climate change, biodiversity loss and resource scarcity,
particularly as the international community prepares to set the post2015 sustainable development agenda. These pressures manifest
themselves in a variety of ways, not the least of which is the
significant challenge they present to global food security. If we are
to meet the needs of our fast-expanding population, we must find
a way to survive and thrive on the sustainable dividends that natural
systems provide and to move away from current practices that
deplete or undermine them.
Fisheries are an excellent example of how we can successfully
reshape food systems and make them more productive while
enhancing their health and resilience. There is a strong body
of good practice that shows how abundant and healthy fish
stocks support greater social and economic benefits for society.
In addition, while most fisheries are either over or fully exploited,
they do still have the capacity to regenerate. For this reason, we
must act quickly to put them on a more sustainable path before
it is too late.
One key constraint to recovering fisheries at the pace and scale
required has been a lack of capital to finance the transition. This
need not be the case going forward. Investments that take on
board the opportunities and risks that are particular to fisheries
can lead to transitions in management, fishery health and economic
development that not only substantially enhance ecological
resilience, but which also improve food and employment security.
The alignment of financial capital with natural and social capital
should be the new paradigm across all economic sectors, but
perhaps especially fisheries.
2
2
This document provides a framework for scaling up investment in
the transition to sustainable fisheries. We hope that it will stimulate
the rapid growth of projects that address this challenge and that
are urgently required to meet the needs of the 3 billion people
who rely on fish for their primary source of animal protein and
the 300 million people who are involved in the sector. We also
hope it will begin to reveal the considerable benefits that can be
gained through this transition and catalyse a conversation about
the solutions that will move us forward.
Justin Mundy
Director
The Prince of Wales’s
International Sustainability Unit
Laurence Band
Senior Advisor
Environmental Defense Fund
3
EXECUTIVE SUMMARY
Marine capture fisheries provide significant benefits at a global
and local level. They contribute more than US$270 billion to global
GDP, provide nearly three billion people with at least 20% of their
total animal protein and employ hundreds of millions of people,
the majority of whom are in developing countries. Currently, the
benefits of marine capture fisheries are under threat. The good
news is that proven solutions and tools exist to help fisheries
recover to remove this threat, transition to a healthy and profitable
state and secure benefits into the future. Because the transition
to sustainable fisheries will inevitably require investments, the
question of how the transition will be financed, and by whom,
must be answered.
The investment case for financing the transition to sustainability
is clear. Fisheries generate significantly more value when they
are sustainably managed, while also providing biological and social
benefits. Furthermore, the fundamental economics of the global
seafood market suggest that prices will continue on an upward
trend, as will the demand for sustainable products. Therefore,
investing in sustainable fisheries can be seen as both a necessary
and potentially profitable investment.
To date, the transition to more sustainable, profitable fisheries has
been largely funded by philanthropic and public sources of money.
However, these types of capital alone cannot support the rate and
scale of fisheries reform that is required on a global level. At the
same time, past and current investments in fisheries have, in some
instances, undermined the underlying resilience of natural and
social capital. It is now time to explore a new approach to investing
in the transition, an approach which involves all types of financial
capital – from philanthropic to public to private. Each can play an
important role and through coordination and integration, different
types of capital can work together to finance the transition to selfsustaining fishery systems.
This document provides a framework for developing and financing
fishery transition projects. It is informed by existing work in the
field and is intended as a discussion document to stimulate thought
and progress towards investment in sustainable fisheries.
4
Case studies and on-the-ground research suggest three key
enablers of sustainable and profitable fisheries that, together,
provide the basis for increased value:
1.
Secure tenure aligns the incentives and empowers the fishing
industry to pursue sustainable use of the resource and is a vital
first step in the transition
2. Sustainable harvests determine how much fish can be
sustainably taken from the fishery and enable the creation
of both management and investment frameworks
3. Robust monitoring and enforcement provide assurance that
fishers will comply with sustainable management and reduce the
likelihood of illegal activity that could undermine the transition
These conditions, particularly establishing secure tenure, provide the
platform for unlocking greater social, economic and environmental
value in fisheries and are vital to investment activities. Investments
in fisheries development that ignore these considerations are at risk
of undermining their long-term viability.
With the conditions described above in place, investment
can be channelled towards the three key drivers of increased
fisheries value:
1.
Improving stock health leads to a more abundant resource
that supports higher long-term yields and makes fish less costly
to find and to catch
2. Increasing operational efficiency reduces the cost of fishing
and delivering fish through the supply chain, improving profit
margins and thus improving the returns from fishing as a whole
3. Increasing market value through improved market access,
certification, branding and long-term partnerships returns
more value to fishers
In order to attract appropriate investment, project developers must
address key requirements including:
1.
A clear business case for the transition that includes
a contextual analysis of the project and as well as a bioeconomic and financial model of the investment proposition
5
2. Investable entities to act as counterparty to the investment;
these can be existing, modified, or newly created entities
3. Mechanisms for capturing return from the beneficiaries
of the transition to share the upside of a transitioned fishery
with the investor, such as dividends, taxes, or fees
4. Risk management through appropriate identification and
articulation of risks, as well as efforts to mitigate or manage risk
Structuring the investment to align and coordinate sources
of capital can create a financially sustainable transition and match
investors to the financial, environmental and social returns that
fisheries provide. Project developers can consider two key points:
1.
Sources of capital, or investors, fall along a spectrum based
on, among other things, target returns, type of investment
and target terms. Traditionally, fishery transitions have been
funded by ‘impact-only’ investors who expect no return or
little financial return
2. Combining capital to sequence, blend or layer investment
structures can effectively reduce and spread risk, while
leveraging larger pools of capital. Including different types
of investors will ultimately unlock the resources needed
to start to address the scale of the challenge that lies ahead
In conclusion, whilst the scale of necessary fisheries transition
is immense, so is the amount of available capital, if projects are
well developed and appropriate financial structures are applied.
And all actors have a role to play. Project developers and the fishing
industry can create investable propositions out of fishery transition
plans. Governments can establish the enabling conditions for
sustainable and profitable fisheries. Investors can work together
to develop innovative ways to appropriately combine sources of
capital. Critically, all of these actors can work together to implement
‘proof of concepts’ and develop a pipeline of projects.
6
1
INTRODUCING FISHERIES
AS INVESTABLE
PROPOSITIONS
7
MARINE capture fisheries have for centuries provided
populations with a healthy and renewable source of food and
significant economic and social value. In order to continue to reap
the rewards of this renewable natural resource, fisheries require
a transition to policies and practices that promote sustainability
of the resource and profitability for the catching sector and broader
value chain. The good news is that there is a growing body of
research, backed by real-world examples, that shows how this
can be achieved.
The transition to sustainable fisheries has accelerated in recent
years, with an increasing number of examples in which collaborative
efforts have led to real changes in and on the water. However,
the change required is still immense and there is an urgent need
to increase both the pace and scale of reform.
The transition requires action from multiple actors, including
government, industry and in many cases, non-governmental
organisations (NGOs) (McClurg, 2014). It requires significant
upfront investment and raises two critical questions: how will the
financing of the transition to a fully sustainable fishing industry be
structured, and who should bear the burden of costs? Evidence
from the past two decades suggests that answers to these questions
have not been easy to find.
Solutions to these challenges lie in the very benefits, particularly
the economic benefits, which the transition process creates.
Reforming a fishery to a more socially and ecologically sustainable
state can significantly increase economic value. The large economic
potential of reformed fisheries provides a leverage point to engage
a broad range of investors. Furthermore, there is significant and
growing interest in using new forms of capital to catalyse or support
fisheries reform. The challenge now is to create, finance and scale
up the projects capable of ensuring lasting solutions.
See page 72 for glossary
and acronyms.
All sources of capital – including philanthropic, public and private
– already substantially participate in the global fish economy; some
uses of capital support long-term sustainability, while others may
work counter to it. Current investments made into the biological
recovery of fisheries are principally motivated by environmental
or social impact and therefore funded by philanthropic or donor
organisations that are not financially motivated. On the other hand,
commercial investors have traditionally invested in activities that
8
do not necessarily advance social or environmental resilience,
i.e. they have not invested in conserving the resource base
on which seafood investments depend. In addition, the capital
currently deployed to fisheries transition is neither sufficient
nor is it effectively organised or leveraged to maximize its impact.
One of the key barriers to unlocking appropriate sources of
finance to help drive and support fisheries reform is an information
gap. Those working to reform fisheries are often not sufficiently
equipped to understand how to attract capital from appropriate
sources. For example, project developers, such as NGOs and other
intermediaries, may not understand the risk/return preference of
various types of investors and how they may match with different
stages of the reform process.
Similarly, investors may not understand the entire range of activities
and steps required to ensure sustainable and profitable fisheries.
For example, ensuring fish stock sustainability generally requires
policy change by governments, whereas fishers and seafood
companies make independent business-level decisions to increase
operational efficiency or derive more market value. Pursuing only
one strategy may not deliver as much financial return as pursuing
these together.
This document aims to bridge that information gap by
providing a framework for developing more coherent investable
propositions that are able to attract a broader range of capital
providers. It provides basic information on the financial case for
fisheries reform, the necessary activities for achieving sustainability
and increasing value, how to create an investment proposition
and how to structure investments based on the project. It is
primarily intended to educate project developers but may be
useful for investors as well. Alone, this document does not provide
sufficient detail to develop a project and the required investment,
but it does reference other tools and resources to support the
transition. There is a growing group of consultants and practitioners
who are versed in fisheries finance issues and can assist in the
application of this framework. Furthermore, it is anticipated that
this will be a living document that can be expanded and modified
over time.
9
The importance of global fisheries
Marine capture fisheries support a vital economic sector that
generates significant value, employment and food security, as
well as many other non-financial benefits. From an economic
perspective, wild fisheries contribute more than US$270 billion
to global GDP, which increases by a further US$160 billion per year
when related activities, such as fish processing and boat building,
are included (World Bank, 2012). This amounts to approximately
1% of global GDP. At the national level the economic value of
fisheries can be much higher, representing 30% of GDP in the
Seychelles for example.
Fish is a highly traded commodity and as such generates valuable
foreign exchange, particularly in developing countries. Fisheries
also contribute to economies through tax revenue both at the
production level and through the activity of supporting sectors
such as canning, processing and distribution. Globally, fisheries
employ approximately 260 million people, both directly as fishers
and within the value chain (Teh and Sumaila, 2013). Furthermore,
given the role of fishing as an important subsistence and safety-net
activity for many of the world’s poorest communities, it is likely
that millions more people are involved in, or indirectly dependent
on, fishing activities than appear in official statistics.
In addition to their economic importance, fisheries are critical
for food security, providing approximately three billion people
worldwide with at least 20% of their total animal protein (FAO,
2014a). In some countries where there is a lack of alternatives, or
where a preference for fish has developed, the relative importance
of fish is much higher. For example in Japan, nearly 40% of animal
protein consumed is from seafood products (FAO, 2013a) and the
catching and eating of fish plays a significant role within culture
and society. Similarly, in the Maldives, a country where the marine
exclusive economic zone (EEZ) is over 3,000 times larger than the
available landmass, fish play a vital role in society, contributing over
70% of animal protein consumed (FAO, 2014a).
The ability of wild fisheries to continue to produce fish is predicated
on the continued viability of the marine ecosystems in which they
exist and the appropriate management of fish stocks to ensure
their sustainability. The wider marine environment supports fish
stocks by providing breeding and nursery grounds and stable
10
food webs. Healthy ecosystems are critical for the maintenance
of fishing activity and, in turn, where fishing takes place,
sustainable management is essential for the maintenance of healthy
ecosystems. In addition, healthy marine ecosystems also directly
benefit global populations in many other ways – for example,
through regulation of climate, flood defence and tourism revenue
– and therefore the importance of maintaining their health
through sustainable practices goes further than just fish production
(Pauly et al., 2005).
However, despite their importance, global fisheries are an
underperforming asset. The economic, social and ecological
functions they provide are threatened by widespread
mismanagement of fishing activity. According to the Food
and Agriculture Organization of the United Nations (FAO),
overexploitation of fish stocks has depleted 30% of the world’s
assessed fisheries to an unproductive state (FAO, 2014a). Another
study estimates that as the majority of fisheries have not been
formally assessed, it is possible that as much as two-thirds
of all global fisheries are overfished (Costello, et al. 2012).
The effects of mismanagement have already materialised in many
places: communities have suffered a loss of food and livelihoods,
local economies have declined and the marine environment
has experienced fundamental changes to ecosystem functionality.
For example, the collapse of the iconic cod fishery of the Canadian
Grand Banks, a fishery once thought to be limitless, resulted in
a fundamentally changed ecosystem where it is unlikely cod will
recover to its historic abundance without significant intervention.
As a result, the region experienced a significant economic downturn
and a loss of over 20,000 directly and indirectly related jobs
(Gien, 2000), as well as the disappearance of a unique element
of Newfoundland’s cultural heritage. In the Philippines, a recent
study has shown that only 10% of the fish stocks remain compared
to 40 years ago. This has implications for millions of people
who depend on fishing and are already on the poverty line.
Multiple international treaties and agreements recognise
unsustainable fishing practices as a major global issue1 and there
is a growing response taking place to encourage the transition
to sustainability in multiple regions. This effort is primarily (although
not exclusively) being coordinated and undertaken by NGOs
1. For example, major
agreements include
the UN Code of Conduct
for Responsible Fisheries
and the UN International
Plan of Action for the
Management of Fishing
Capacity. Key treaties
include the UN
Convention on the
Law of the Sea and UN
Agreement on Straddling
and Highly Migratory
Fish Stocks, and many
activities are also carried
out through regional
treaties.
11
and governmental and intergovernmental organisations that have
developed extensive knowledge around the types of intervention
that are needed to establish sustainable fisheries. It is, however,
clear that regulation and governance alone cannot solve the global
issue of fisheries sustainability (McClurg, 2014).
The transition to sustainable fisheries will not only prevent the
further deterioration of fish stocks, it can also help global fisheries
reset to a higher, more productive and more profitable level.
Research indicates that the global harvest from wild caught fish
could be up to 40% higher and that global fish abundance could
increase by 50% if sustainable management were introduced
and marine capture fisheries were allowed to recover (Costello
et al., 2012). According to The World Bank (2010), global fisheries
could be worth an additional US$50 billion annually. In other
words, the upside benefit of sustainable fisheries is huge and
should be considered a ‘no-regrets option.’
The investment case
Fisheries transition, in many ways, displays similar traits to those
of a classic investment turnaround: the upfront costs of transition
are offset by the profits that are generated through more efficient
and productive fisheries with higher harvests and lower costs.
In other words, there is a real return on investment to be had.
The state of global food markets offers a strong case for both the
need for, and potential returns from, the transition to sustainable
fisheries. Demand for seafood continues to grow, while supply
has been constrained, which has led to a substantial increase
in prices since the early 2000s – as can be seen in figure 1.
While a growing aquaculture industry can meet some of this
demand, marine fisheries still generate nearly 60% of fish sold
to consumers (EKO Asset Management Partners, 2014). There
will continue to be a large market for wild seafood, both to serve
basic food security needs in less developed countries and to serve
regions where a premium is placed on wild, sustainably caught
fish (World Bank, 2013). Investments that increase the supply
and sustainability of this commodity are, therefore, both necessary
and potentially profitable.
12
180
100
160
90
80
140
70
Fish price index
120
60
100
50
80
40
60
30
40
20
10
0
0
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
Global marine capture production (tonnes)
Fish price index – capture
Source: Tveterås et al, 2012 and FAO, 2014b
Fortunately, proven solutions and tools exist to turn around
all types of fisheries. Many case studies from around the world
(see table 1) indicate the upside associated with the transition
to sustainable fisheries and sustainable management.
Scoping studies have shown that for many fisheries, the increase
in overall profit that is generated through the transition process
is more than able to pay for the upfront costs of undergoing the
transition and for the on-going costs of sustainable management,
as well as provide a financial return for investors.
13
Marine capture production (millions of metric tonnes)
FIGURE 1 Price and supply of fish over time
TABLE 1 Increase in revenues in select fisheries
Fishery revenues
– before
Pacific halibut
fishery
Ben Tre clam
fishery
New Zealand’s
fisheries
US$77M (1992)
US$0.837M
(2007)
US$1,577M
(1986)
Investment
activities
Fishery revenues
– after
1995: Secure
tenure; Monitoring
and enforcement
US$248M (2008)
222%
2006 to 2009:
Secure tenure;
MSC certification
US$1.25M (2010)
49%
1986: Secure
tenure; Monitoring
and enforcement;
Sustainable
harvests
US$3,200M
(unkn)
Percent increase
103%
Sources: Tindall, 2012; MRAG, 2010
However, whilst the theory is strong, there have been some
clear barriers to using financial capital to drive the necessary
changes. These include the inability of project developers to
articulate and present an investment proposition; the lack of
organized entities that are able to receive investment and provide
payback mechanisms; and the limited ability of project developers
and investors to identify, mitigate and manage the idiosyncratic
risks associated with fisheries. To date, few projects have created
real investment propositions which clearly state the return on
investment and highlight the associated risks. At the same time,
projects focused on fisheries transition have not always included
the suite of activities that are necessary for generating and
protecting future economic potential.
The next two chapters attempt to highlight the enablers and
drivers of value increase around which an investable proposition
can be developed.
14
2
ENABLERS OF
INCREASED VALUE
15
MANY fisheries are underperforming assets that could generate
significantly more economic value, alongside significant social
and environmental benefits. First and foremost, fisheries must be
managed in a way that ensures environmental sustainability while
allowing the fishery to meet social and economic goals. Research
and experience highlight three key elements that must be in place
to enable a sustainable and financially-viable fishery:
1.
Secure tenure
2. Sustainable harvests
3. Robust monitoring and enforcement
These enabling conditions, which are described in more detail
below, provide the foundation from which stock recovery can be
successfully implemented and maintained and create a more stable
business environment for fishers to further improve their operations
and access to market. In addition, particularly in the case of secure
tenure, they also serve to catalyse an immediate increase in value
in the fishery overall.
Some fisheries will have none of these conditions in place, while
others may have only one or two. Furthermore, they may be poorly
designed and ineffectively implemented. In any case, projects
seeking to improve fisheries and generate a return for stakeholders
should be designed to introduce or strengthen these management
elements and investors should evaluate proposals based on the
ability for these conditions to be achieved.
See page 72 for glossary
and acronyms.
16
SECURE TENURE
Key actors
Since fish stocks are considered to be a public resource, governments
(national, regional and local) are responsible for establishing policies
for their management and play a primary role in the development
and implementation of secure tenure systems.
The private sector, specifically the fishing industry itself, can also play
a key role in designing, advocating for and administering a secure
tenure system. NGOs may support the process by providing technical
assistance and expertise.
Implementing secure tenure provides fishers with a long-term
vested interest in the health of the resource. It provides access
and exclusivity to secure, long-term returns, which are essential
for increasing the value of fisheries. Tenure systems allocate a secure
area or share of the catch to those who operate within the fishery
and whose business depends on the fish stocks (MRAG et al, 2009;
WWF, 2011; Bonzon et al, 2013). Secure tenure can be allocated
to groups of fishers, such as cooperatives, or individuals.
Establishing secure tenure is important because it changes fishers’
incentives. Overexploitation of fish stocks and the significant
lost value that results is primarily due to the dynamics of openaccess resources. Characterised as the ‘tragedy of the commons’
(Hardin, 1968), in an open-access fishery it is rational and profitable
in the short-term for fishers to remove more fish from the sea
than it is possible to replenish. As a result, over the long term
the available resource base declines and fishing activity becomes
increasingly marginal, until almost no economic benefit is derived
from it. On the other hand, secure tenure ties current behaviour
to future outcomes and incentivises fishers to invest in longterm sustainability.
In many cases the immediate economic impact of establishing
secure tenure can be dramatic. For example, the formation of
a fishing cooperative with a secure, area-based tenure system
known as TURFs (territorial use rights for fishing) in the Ben Tre
clam fishery in Vietnam allowed the local fishers to set harvest
limits for future benefit and achieve sustainability certification.
17
The value of this fishery increased by 49% in 3 years (Tindall, 2012).
In the Danish pelagic and demersal individual transferable quota
(ITQ) programme, fleet-wide profits increased as much as 20%
following establishment of secure tenure and fishers doubled their
investments in value-add activities (such as processing, filleting and
canning). Furthermore, a review of 15 fisheries in North America
showed an average 90% increase in revenue per vessel five years
after establishment of secure tenure (Grimm et al. 2012).
Well-implemented secure tenure requires that the conditions
are clearly defined and can only be revoked through a legitimate
process. This gives fishers the security to plan for the long-term,
and by extension gives investors the confidence to commit funds.
The process and corresponding rules for defining secure tenure
through access and use conditions can take many forms, as outlined
in box 1. Having secure tenure is fundamental to reducing the
risk of investment in fisheries. For an investment in the transition
to sustainable fisheries to generate a return, it is essential that all
actors are incentivised to operate according to the transition plan
over the length of the project lifetime. Secure tenure establishes
the appropriate incentives and helps achieve long-term stakeholder
engagement by the fishing industry.
18
BOX 1 Resources for establishing secure tenure
There are several resources available for establishing secure
tenure. These resources, which are applicable to a variety of
different fisheries and address a diversity of stakeholder goals,
are commented on in this section, and full references can be
found at the end of this report.
Secure tenure encompasses many systems of management and
is often referred to as rights-based management or catch shares.
According to EDF’s Catch Share Design Manual (2013) a catch share
program “allocates a secure area or privilege to harvest a share of
a fishery’s total catch to an individual or group. Programs establish
appropriate controls on fishing mortality and hold participants
accountable.” Amongst the different systems of catch share are
individual transferable quota (ITQ), individual vessel quota (IVQ),
Cooperative catch shares and territorial use rights for fishing
(TURFs), each of which have specific advantages and limitations.
Other organisations that have highlighted the potential use of
secure tenure and provided guidance include WWF (WWF, 2011),
the World Fish Center (Andrew & Evans, 2009) and the European
Union (MRAG et al, 2009).
In addition, several organisations have created guidelines for the
establishment of secure tenure, either through legal frameworks
or voluntary guidelines. The latter has been covered in some
detail by the FAO, which produced voluntary guidelines for the
governance of tenure (including for fisheries) in 2012 and draft
guidance on applying secure tenure as it applies specifically
to fisheries in 2013 (FAO, 2012; FAO, 2013b).
19
SUSTAINABLE
HARVESTS
Key actors
Governments are usually responsible for ensuring that harvests
are sustainable and therefore have a primary responsibility for final
review and authorization of harvest controls. However there is
debate around who should be responsible for funding and collecting
data and recommending harvest levels.
In some cases, government takes on the responsibility for these
activities, which is considered useful in order to avoid potential
conflicts of interest. In other cases, the industry plays more of an
important role, particularly in the financing of stock assessments
and collection of data. For example, the fishers in the Chilean
loco fishery pay for their own stock assessments in order to make
the most informed business decisions (Tindall, 2012). NGOs may
also play an important role by providing resources and knowledge
to assist the process of setting sustainable harvests.
Compliance with appropriate controls on fishing mortality is a
vital component of a sustainable fishery and requires limiting catch
to a level that promotes sustainable exploitation of the resource
and allows for stock recovery, if needed, or the maintenance
of stock health if the fishery is already at target biomass levels.
A sustainable harvest plan is primarily based on the current health
of the population and the biology of the fish species. Setting
sustainable harvests relies on data collection, analysis, modelling
and interpretation of the results, which in turn will require upfront
and ongoing investment.
Understanding the health of the stock, and therefore the expected
productive output of a fishery over time is key for investors, as
well as managers and fishers. At minimum, to enable the creation
of a sustainable business plan, data on fishery landings or on the
fish populations themselves need to be collected. Fortunately,
the process of data collection and stock assessment is itself wellestablished and clear guidance on collecting and processing data
has been produced by the FAO and others (see box 2).
20
BOX 2 Resources for determining sustainable harvests
Assessing the status and productivity of fish stocks is crucial
to determining long-term sustainable harvests and avoiding
overfishing. However, many fisheries lack formal scientific
assessments; one study suggests that 80% of landed catch comes
from unassessed species (Costello et al., 2012). Such assessments
are often not performed due to two obstacles: the cost of these
assessments and the lack of historical data records (Apel, Fujita
and Karr, 2013). Fortunately, the recent development of “datalimited methods” has reduced the cost and data requirement of
determining sustainable harvests. A number of reports have been
written describing these approaches and providing guidance on
their use. These publications are commented on in this section,
and full references can be found at the end of this report.
In some cases, resources and data for determining stock status
will not be constrained and a formal stock assessment can be
performed. Governments often employ fishery scientists for
this purpose. It is common for academics or private sector
businesses to perform stock assessments for a fee, and while some
organisations, such as EAF-Nansen2, may undertake full stock
assessments pro bono, it is exceedingly rare. Two guides to formal
stock assessment have been provided by the FAO (Cadima, 2003
and Hoggarth et al., 2006).
For fisheries with fewer resources available to collect and interpret
fisheries data, alternative assessment methodologies have been
developed in recent years. EDF’s Science-Based Management
of Data-Limited Fisheries (2013) report describes a number of
effective methods for data-limited situations, while providing
a framework for selecting an appropriate approach. Other
resources provide more detailed summaries and examples of the
application of data-limited approaches (California Sea Grant, 2008;
Honey et al., 2010; FAO, 2014c). New methods are developing
rapidly, further expanding the availability of options to determine
sustainable harvests (for an example see Costello et al., 2012).
2. For more information,
please see www.eafnansen.org/nansen/en
21
A robust stock assessment is the best method for understanding
stock status and setting harvest levels, but assessments have
traditionally been costly and required significant amounts of data.
Many fisheries around the world have little reliable data or money
for science. New cost-effective methods for approximating stock
status when data is limited are being developed (Apel, Fujita & Karr,
2013) and may be a good starting point for many fisheries.
Given its importance, data availability and reliability also has an
effect on investment risk. Fisheries that have accurate, appropriate
data will reduce levels of uncertainty and therefore increase
investor confidence. Uncertainty in stock data and assessments
is always a concern because factors such as the growth rates
of a specific stock, the carrying capacity for that stock and the
environmental variability brought on by seasonal changes or human
interference are inherently uncertain. Clearly, this uncertainty is
pronounced for data-limited fisheries (Honey et al, 2010). The cost
of extra data collection and analysis should be weighed against the
degree to which uncertainty will be reduced.
22
ROBUST
MONITORING AND
ENFORCEMENT
Key actors
The public sector has a key role in establishing policy that defines
legal and illegal fishing activity. The public sector may also play a
direct role by financing and providing monitoring and enforcement
activities. Increasingly, the private sector is playing a role in
providing information to ensure compliance with rules, especially
in fisheries with secure tenure. For example, fishery cooperatives
or associations may establish monitoring protocols for their members
and pay for monitoring.
In some cases, the roles and responsibilities of monitoring and
enforcement are shared, even if only informally, between public
and private entities. A good example of this is in the Patagonian
and Antarctic toothfish fishery, where collaboration between
governments, the industry and NGOs was necessary to tackle
illegal, unregulated and unreported (IUU) activity (Tindall, 2012).
Though these collaborative approaches can remain informal,
clearly defining roles to ensure that a transparent and robust
system is in place is vital to deterring unwanted fishing activity.
Effective monitoring and enforcement systems help ensure that
the value and cash flows generated from a productive fishery are
secure into the future. Systems must be in place to ensure legal
fishery participants comply with rules and regulations, such as
harvest limits, while also preventing illegal fishing activity from
those encroaching on the regulated sector.
Establishing secure tenure is an important step to providing fishers
with the right incentives to prevent or deter illegal, unregulated
and unreported (IUU) fishing. Secure tenure changes incentive
systems from within the fishery itself, such that incidence of illegal
or unreported fishing is naturally and cost-efficiently reduced.
Furthermore, fishers with secure tenure are more likely to support
systems that prevent outsiders from poaching their fish stocks,
23
as is the case in the Baja California lobster fishery where fishers
annually fund US$1 million in enforcement activities to protect their
resource against outsiders (Cunningham, 2013). However, in many
cases extra measures are also required.
IUU fishing activity is one of the most significant risks to sustainable
fisheries. Unfortunately, the global incidence of IUU fishing is
high, accounting for as much as US$23.5 billion annually across
EEZs and the high seas, at a mean loss of 18% of catch per fishery
(Agnew et al, 2009). There is therefore a clear incentive to enable
robust monitoring and enforcement and to reduce or eliminate
IUU activity.
Methods to prevent or restrict illegal fishing vary depending on
the size and situation of a fishery but there is generally a need for
both physical assets for monitoring and enforcement (such as patrol
boats) as well as the human capacity for effective control of a
fishery – both of which require upfront and ongoing investment.
Additionally, education and awareness-raising within local
communities on the importance of long-term sustainable
management can increase the degree of engagement with a
management plan and therefore reduce the risk of infraction.
A good example of this comes from Zanzibar’s Village Fishermen
Committees, where education programmes resulted in improved
fishery surveillance undertaken jointly by government and the
committees and eventually to a regeneration of marine resources
(Tindall, 2012).
From this, it is clear that ensuring robust monitoring and
enforcement will significantly reduce the risk of investment in
the transition, as it either reduces or eliminates existing IUU activity
and discourages any new IUU activity from starting.
24
3
DRIVERS OF
INCREASED VALUE
25
THERE are three key drivers that increase fishery value:
1.
3. Two common target
levels for sustainable
yields exist. Maximum
sustainable yield (MSY)
is the point where
the harvest from
the fishery is both
as high as possible
Stock health: The stock health determines the possible
harvest, or production level. When the stock is healthy
consistently larger harvests can be produced over the long
term. In cases where the stock is overfished, allowing fish
stocks to recover to a target level3 will ultimately result in
a higher, sustainable harvest.
2. Operational efficiency:4 Efficiency occurs at the fleet
level – including cooperatives and communities – and
the individual business level. These changes can take place
in both the catching sector as well as the rest of the supply
chain. Changes in management and/or individual business
decisions—such as better use of existing resources, use of
fewer resources, installation of more efficient technologies,
or better organisational structures—can reduce costs and
lead to greater value.
and can be sustained
indefinitely with proper
management. Maximum
Economic Yield (MEY)
is the point where the
greatest sustainable
3. Market value: The value of a fishery product at market
determines the fleet or individual revenues. An improved
ability to access and serve the demands of seafood markets
can increase revenue.
profits are achieved and
usually results in slightly
lower harvests and a
larger number of fish in
the water. The primary
difference between MSY
and MEY is MEY factors
in the costs of fishing,
whereas MSY does not.
4. In fisheries
terminology, operational
efficiency is commonly
defined as catch-per-
The previous chapter explains how implementing the right incentive
and management systems in a fishery is a critical first step in
unlocking the value of the fishery. Further to this, fishers, whether
as individuals or cooperatives, have the ability and incentive
to improve the bottom-line of their businesses in a way that
contributes to the overall sustainability of the fishery. This chapter
outlines some of the ways that this can be done. Importantly, if
basic conditions described in the previous chapter are not in place,
any attempts to increase stock health, operational efficiency or
market value will likely be eroded and value will dissipate over time.
unit of effort, or CPUE,
where effort is defined
by a single fishery
input or combination
of fishery inputs. For
example, CPUE might
be described as the
catch per vessel-day.
See page 72 for glossary
and acronyms.
26
STOCK HEALTH
Key actors
The public and private sectors both have a role to play in ensuring
stock health.
The public sector can be responsible for establishing policies that
permit or directly implement the conditions that ensure a healthy
stock: secure tenure, sustainable harvest limits and effective
monitoring and enforcement. The public sector may also finance,
in full or in part, activities that support these conditions.
The private sector, in particular the catching sector, can be involved
in policy designs such that they incorporate fisher input as well as
play a role in financing, administering and operating management
systems that maintain stock health.
NGOs may support stock health with technical assistance to support
the design and implementation of enabling conditions.
The fish stock (or in the case of mixed fisheries, fish stocks)
is the natural capital base on which the value of the fishery
is built. A healthy stock that is fished at a sustainable level will
provide significant and ongoing value. On the other hand,
an overfished, collapsed or declining stock provides reduced
and diminishing value.
The health of the stock, broadly speaking, drives value in two
different ways: first, through the number of fish available for
sustainable harvest, and second, through the relationship between
this number and the costs required to find and catch the fish. If
the stock diminishes – there are less fish available to catch – fishing
likely requires more effort in terms of travel to fishing grounds and
time to search for fish.
The goal is to maintain the stock at a level that either maximizes
the amount of fish that can be removed on a sustainable, ongoing
basis (Maximum Sustainable Yield or MSY) or maximizes the value
of the fishery (Maximum Economic Yield or MEY, which factors in
the costs of fishing, produces a lower harvest than MSY and leaves
more fish in the water). See figure 2 for more information.
27
As discussed in the previous section, there are three key enabling
conditions that ensure a healthy stock: secure tenure, sustainable
harvest limits and effective monitoring and enforcement. There
are additional approaches which may help bolster stock health
and increase product value. One approach is an ‘ecosystem-based’
approach which recognises the importance of wider ecosystem
dynamics in determining the stock health. One important
component of this is the establishment of temporary or permanent
closed areas that protect important parts of the ecosystem.
For example, in the Spencer Gulf prawn fishery of South Australia
(Tindall, 2012), fishers activate rolling, temporary closures to help
to maintain the stock at a healthy level. In addition, restrictions
can be put in place around size or sex of landed fish. These
restrictions can help to keep productive parts of the stock in the
water, thereby ensuring future value of the fishery at the same time
as enhancing dock-side value. All of these measures can maintain
the sustainability and resilience of the stock, thereby increasing
the value of a fishery.
28
FIGURE 2 Stock health and the costs and revenues of fishing
Maximum sustainable yield
(MSY)
Maximum economic yield
Open access
(MEY)
b
Increasing level of catch / value of catch
c
a
Net economic profit
(MSY)
Net economic profit
(MEY)
c
b
Increasing fishing effort
Decreasing fish stock
Total cost of fishing
Total value of catch
Figure 2 depicts the costs and revenues of fishing for three
scenarios. The dark blue line shows the catching sector revenues
for sustained levels of fishing effort and the light blue line shows
the total catching sector costs of fishing. The difference between
the two lines is the economic profit from fishing. At high levels
of fishing effort, fish stocks are depleted, fishing costs are high
and values derived from fishing are low. At MSY, sustainable
harvests from a fishery are maximized, providing the most food
production on a sustained basis. At MEY, the economic value
of the fishery is maximized by accounting for both the revenues
and costs of fishing. Setting sustainable harvest limits at MSY
will maximize the amount of fish removed sustainably and
setting the catch limit at MEY will maximize the net economic
value of the fishery.
29
a
OPERATIONAL
EFFICIENCY
Key actors
The private sector is the primary group of actors concerned with
increasing operational efficiency as it is one of the key ways industry
can improve the bottom line of a fishery’s economic performance.
The public sector can also impact operational efficiencies by
implementing policies that provide fishers with business flexibility
while ensuring compliance with appropriate standards.
NGOs may play an important role in linking operational efficiency
with the broader context of fishery sustainability.
Improving the operational efficiency of a fishery includes any
activity that reduces the cost of fishing or delivering seafood
through the supply chain. Increasing efficiency and overall profit
margins will improve the return on investment (ROI) of the
transition process as a whole. Historically, improving efficiency
in the absence of a robust management framework has led to
increased catch and stock depletion. However, in the context of
the overall transition, increasing margins for fishers is an important
component of economic sustainability.
5. WWF SmartGear
competition:
www.worldwildlife.org/
initiatives/international-
To a certain extent, the elements of the transition framework
discussed thus far will improve the bottom line of fishing activity.
When fishers have the stability of a long-term share of the fishery
and when the fish stock is healthy and resilient, fishers attain the
flexibility to make business decisions that can maximize operational
efficiency. For example, fishers can deploy improved fishing
gear that is better suited to the target species, more effective at
eliminating non-target species, or more fuel efficient. Technical
improvements resulting in reductions in non-target catch often have
downstream efficiency gains too, requiring less time and effort to
process and sort the fish that has been caught. In the New England
groundfish fishery for example, the introduction of t
INVESTMENT IN
SUSTAINABLE
FISHERIES
A FRAMEWORK
FOR FINANCING THE
TRANSITION
Discussion document
TOWARDS
INVESTMENT IN
SUSTAINABLE
FISHERIES
A FRAMEWORK
FOR FINANCING THE
TRANSITION
Discussion document
Environmental Defense Fund
257 Park Avenue South
New York, NY
10010
United States of America
The Prince of Wales’s
International Sustainability Unit
Clarence House
London
SW1A 1BA
United Kingdom
Registered charity number 1127255
50in10
New Venture Fund
1201 Connecticut Ave. NW, Suite 300
Washington DC
20036
United States of America
CONTENTS
Foreword
2
Executive Summary
4
1 Introducing fisheries as investable propositions
2 Enablers of increased value
7
15
Secure tenure
17
Sustainable harvests
20
Robust monitoring and enforcement
23
3 Drivers of increased value
25
Stock health
27
Operational efficiency
30
Market value
32
4 Requirements for securing investment
36
A business case for the transition
38
Investable entities
41
Mechanisms for capturing the return
45
Risk management
50
5 Considerations for structuring the investment
54
Sources of capital
56
Combining capital to create scale and reduce risk
59
6 Conclusions
64
Annex 1: Risk
66
Annex 2: A selection of fisheries funds
70
Glossary
72
References
76
Acknowledgements
81
1
FOREWORD
We have reached a critical moment in history. There is a widening
gap between what we demand of the Earth’s natural systems and
what those systems can provide. We face a series of important
decisions at the heart of which lies a crucial choice: whether to
carry on with business as usual or change our practices in order
to sustain the natural capital that, in turn, sustains us.
We now have the opportunity to address the increasingly urgent
matters of climate change, biodiversity loss and resource scarcity,
particularly as the international community prepares to set the post2015 sustainable development agenda. These pressures manifest
themselves in a variety of ways, not the least of which is the
significant challenge they present to global food security. If we are
to meet the needs of our fast-expanding population, we must find
a way to survive and thrive on the sustainable dividends that natural
systems provide and to move away from current practices that
deplete or undermine them.
Fisheries are an excellent example of how we can successfully
reshape food systems and make them more productive while
enhancing their health and resilience. There is a strong body
of good practice that shows how abundant and healthy fish
stocks support greater social and economic benefits for society.
In addition, while most fisheries are either over or fully exploited,
they do still have the capacity to regenerate. For this reason, we
must act quickly to put them on a more sustainable path before
it is too late.
One key constraint to recovering fisheries at the pace and scale
required has been a lack of capital to finance the transition. This
need not be the case going forward. Investments that take on
board the opportunities and risks that are particular to fisheries
can lead to transitions in management, fishery health and economic
development that not only substantially enhance ecological
resilience, but which also improve food and employment security.
The alignment of financial capital with natural and social capital
should be the new paradigm across all economic sectors, but
perhaps especially fisheries.
2
2
This document provides a framework for scaling up investment in
the transition to sustainable fisheries. We hope that it will stimulate
the rapid growth of projects that address this challenge and that
are urgently required to meet the needs of the 3 billion people
who rely on fish for their primary source of animal protein and
the 300 million people who are involved in the sector. We also
hope it will begin to reveal the considerable benefits that can be
gained through this transition and catalyse a conversation about
the solutions that will move us forward.
Justin Mundy
Director
The Prince of Wales’s
International Sustainability Unit
Laurence Band
Senior Advisor
Environmental Defense Fund
3
EXECUTIVE SUMMARY
Marine capture fisheries provide significant benefits at a global
and local level. They contribute more than US$270 billion to global
GDP, provide nearly three billion people with at least 20% of their
total animal protein and employ hundreds of millions of people,
the majority of whom are in developing countries. Currently, the
benefits of marine capture fisheries are under threat. The good
news is that proven solutions and tools exist to help fisheries
recover to remove this threat, transition to a healthy and profitable
state and secure benefits into the future. Because the transition
to sustainable fisheries will inevitably require investments, the
question of how the transition will be financed, and by whom,
must be answered.
The investment case for financing the transition to sustainability
is clear. Fisheries generate significantly more value when they
are sustainably managed, while also providing biological and social
benefits. Furthermore, the fundamental economics of the global
seafood market suggest that prices will continue on an upward
trend, as will the demand for sustainable products. Therefore,
investing in sustainable fisheries can be seen as both a necessary
and potentially profitable investment.
To date, the transition to more sustainable, profitable fisheries has
been largely funded by philanthropic and public sources of money.
However, these types of capital alone cannot support the rate and
scale of fisheries reform that is required on a global level. At the
same time, past and current investments in fisheries have, in some
instances, undermined the underlying resilience of natural and
social capital. It is now time to explore a new approach to investing
in the transition, an approach which involves all types of financial
capital – from philanthropic to public to private. Each can play an
important role and through coordination and integration, different
types of capital can work together to finance the transition to selfsustaining fishery systems.
This document provides a framework for developing and financing
fishery transition projects. It is informed by existing work in the
field and is intended as a discussion document to stimulate thought
and progress towards investment in sustainable fisheries.
4
Case studies and on-the-ground research suggest three key
enablers of sustainable and profitable fisheries that, together,
provide the basis for increased value:
1.
Secure tenure aligns the incentives and empowers the fishing
industry to pursue sustainable use of the resource and is a vital
first step in the transition
2. Sustainable harvests determine how much fish can be
sustainably taken from the fishery and enable the creation
of both management and investment frameworks
3. Robust monitoring and enforcement provide assurance that
fishers will comply with sustainable management and reduce the
likelihood of illegal activity that could undermine the transition
These conditions, particularly establishing secure tenure, provide the
platform for unlocking greater social, economic and environmental
value in fisheries and are vital to investment activities. Investments
in fisheries development that ignore these considerations are at risk
of undermining their long-term viability.
With the conditions described above in place, investment
can be channelled towards the three key drivers of increased
fisheries value:
1.
Improving stock health leads to a more abundant resource
that supports higher long-term yields and makes fish less costly
to find and to catch
2. Increasing operational efficiency reduces the cost of fishing
and delivering fish through the supply chain, improving profit
margins and thus improving the returns from fishing as a whole
3. Increasing market value through improved market access,
certification, branding and long-term partnerships returns
more value to fishers
In order to attract appropriate investment, project developers must
address key requirements including:
1.
A clear business case for the transition that includes
a contextual analysis of the project and as well as a bioeconomic and financial model of the investment proposition
5
2. Investable entities to act as counterparty to the investment;
these can be existing, modified, or newly created entities
3. Mechanisms for capturing return from the beneficiaries
of the transition to share the upside of a transitioned fishery
with the investor, such as dividends, taxes, or fees
4. Risk management through appropriate identification and
articulation of risks, as well as efforts to mitigate or manage risk
Structuring the investment to align and coordinate sources
of capital can create a financially sustainable transition and match
investors to the financial, environmental and social returns that
fisheries provide. Project developers can consider two key points:
1.
Sources of capital, or investors, fall along a spectrum based
on, among other things, target returns, type of investment
and target terms. Traditionally, fishery transitions have been
funded by ‘impact-only’ investors who expect no return or
little financial return
2. Combining capital to sequence, blend or layer investment
structures can effectively reduce and spread risk, while
leveraging larger pools of capital. Including different types
of investors will ultimately unlock the resources needed
to start to address the scale of the challenge that lies ahead
In conclusion, whilst the scale of necessary fisheries transition
is immense, so is the amount of available capital, if projects are
well developed and appropriate financial structures are applied.
And all actors have a role to play. Project developers and the fishing
industry can create investable propositions out of fishery transition
plans. Governments can establish the enabling conditions for
sustainable and profitable fisheries. Investors can work together
to develop innovative ways to appropriately combine sources of
capital. Critically, all of these actors can work together to implement
‘proof of concepts’ and develop a pipeline of projects.
6
1
INTRODUCING FISHERIES
AS INVESTABLE
PROPOSITIONS
7
MARINE capture fisheries have for centuries provided
populations with a healthy and renewable source of food and
significant economic and social value. In order to continue to reap
the rewards of this renewable natural resource, fisheries require
a transition to policies and practices that promote sustainability
of the resource and profitability for the catching sector and broader
value chain. The good news is that there is a growing body of
research, backed by real-world examples, that shows how this
can be achieved.
The transition to sustainable fisheries has accelerated in recent
years, with an increasing number of examples in which collaborative
efforts have led to real changes in and on the water. However,
the change required is still immense and there is an urgent need
to increase both the pace and scale of reform.
The transition requires action from multiple actors, including
government, industry and in many cases, non-governmental
organisations (NGOs) (McClurg, 2014). It requires significant
upfront investment and raises two critical questions: how will the
financing of the transition to a fully sustainable fishing industry be
structured, and who should bear the burden of costs? Evidence
from the past two decades suggests that answers to these questions
have not been easy to find.
Solutions to these challenges lie in the very benefits, particularly
the economic benefits, which the transition process creates.
Reforming a fishery to a more socially and ecologically sustainable
state can significantly increase economic value. The large economic
potential of reformed fisheries provides a leverage point to engage
a broad range of investors. Furthermore, there is significant and
growing interest in using new forms of capital to catalyse or support
fisheries reform. The challenge now is to create, finance and scale
up the projects capable of ensuring lasting solutions.
See page 72 for glossary
and acronyms.
All sources of capital – including philanthropic, public and private
– already substantially participate in the global fish economy; some
uses of capital support long-term sustainability, while others may
work counter to it. Current investments made into the biological
recovery of fisheries are principally motivated by environmental
or social impact and therefore funded by philanthropic or donor
organisations that are not financially motivated. On the other hand,
commercial investors have traditionally invested in activities that
8
do not necessarily advance social or environmental resilience,
i.e. they have not invested in conserving the resource base
on which seafood investments depend. In addition, the capital
currently deployed to fisheries transition is neither sufficient
nor is it effectively organised or leveraged to maximize its impact.
One of the key barriers to unlocking appropriate sources of
finance to help drive and support fisheries reform is an information
gap. Those working to reform fisheries are often not sufficiently
equipped to understand how to attract capital from appropriate
sources. For example, project developers, such as NGOs and other
intermediaries, may not understand the risk/return preference of
various types of investors and how they may match with different
stages of the reform process.
Similarly, investors may not understand the entire range of activities
and steps required to ensure sustainable and profitable fisheries.
For example, ensuring fish stock sustainability generally requires
policy change by governments, whereas fishers and seafood
companies make independent business-level decisions to increase
operational efficiency or derive more market value. Pursuing only
one strategy may not deliver as much financial return as pursuing
these together.
This document aims to bridge that information gap by
providing a framework for developing more coherent investable
propositions that are able to attract a broader range of capital
providers. It provides basic information on the financial case for
fisheries reform, the necessary activities for achieving sustainability
and increasing value, how to create an investment proposition
and how to structure investments based on the project. It is
primarily intended to educate project developers but may be
useful for investors as well. Alone, this document does not provide
sufficient detail to develop a project and the required investment,
but it does reference other tools and resources to support the
transition. There is a growing group of consultants and practitioners
who are versed in fisheries finance issues and can assist in the
application of this framework. Furthermore, it is anticipated that
this will be a living document that can be expanded and modified
over time.
9
The importance of global fisheries
Marine capture fisheries support a vital economic sector that
generates significant value, employment and food security, as
well as many other non-financial benefits. From an economic
perspective, wild fisheries contribute more than US$270 billion
to global GDP, which increases by a further US$160 billion per year
when related activities, such as fish processing and boat building,
are included (World Bank, 2012). This amounts to approximately
1% of global GDP. At the national level the economic value of
fisheries can be much higher, representing 30% of GDP in the
Seychelles for example.
Fish is a highly traded commodity and as such generates valuable
foreign exchange, particularly in developing countries. Fisheries
also contribute to economies through tax revenue both at the
production level and through the activity of supporting sectors
such as canning, processing and distribution. Globally, fisheries
employ approximately 260 million people, both directly as fishers
and within the value chain (Teh and Sumaila, 2013). Furthermore,
given the role of fishing as an important subsistence and safety-net
activity for many of the world’s poorest communities, it is likely
that millions more people are involved in, or indirectly dependent
on, fishing activities than appear in official statistics.
In addition to their economic importance, fisheries are critical
for food security, providing approximately three billion people
worldwide with at least 20% of their total animal protein (FAO,
2014a). In some countries where there is a lack of alternatives, or
where a preference for fish has developed, the relative importance
of fish is much higher. For example in Japan, nearly 40% of animal
protein consumed is from seafood products (FAO, 2013a) and the
catching and eating of fish plays a significant role within culture
and society. Similarly, in the Maldives, a country where the marine
exclusive economic zone (EEZ) is over 3,000 times larger than the
available landmass, fish play a vital role in society, contributing over
70% of animal protein consumed (FAO, 2014a).
The ability of wild fisheries to continue to produce fish is predicated
on the continued viability of the marine ecosystems in which they
exist and the appropriate management of fish stocks to ensure
their sustainability. The wider marine environment supports fish
stocks by providing breeding and nursery grounds and stable
10
food webs. Healthy ecosystems are critical for the maintenance
of fishing activity and, in turn, where fishing takes place,
sustainable management is essential for the maintenance of healthy
ecosystems. In addition, healthy marine ecosystems also directly
benefit global populations in many other ways – for example,
through regulation of climate, flood defence and tourism revenue
– and therefore the importance of maintaining their health
through sustainable practices goes further than just fish production
(Pauly et al., 2005).
However, despite their importance, global fisheries are an
underperforming asset. The economic, social and ecological
functions they provide are threatened by widespread
mismanagement of fishing activity. According to the Food
and Agriculture Organization of the United Nations (FAO),
overexploitation of fish stocks has depleted 30% of the world’s
assessed fisheries to an unproductive state (FAO, 2014a). Another
study estimates that as the majority of fisheries have not been
formally assessed, it is possible that as much as two-thirds
of all global fisheries are overfished (Costello, et al. 2012).
The effects of mismanagement have already materialised in many
places: communities have suffered a loss of food and livelihoods,
local economies have declined and the marine environment
has experienced fundamental changes to ecosystem functionality.
For example, the collapse of the iconic cod fishery of the Canadian
Grand Banks, a fishery once thought to be limitless, resulted in
a fundamentally changed ecosystem where it is unlikely cod will
recover to its historic abundance without significant intervention.
As a result, the region experienced a significant economic downturn
and a loss of over 20,000 directly and indirectly related jobs
(Gien, 2000), as well as the disappearance of a unique element
of Newfoundland’s cultural heritage. In the Philippines, a recent
study has shown that only 10% of the fish stocks remain compared
to 40 years ago. This has implications for millions of people
who depend on fishing and are already on the poverty line.
Multiple international treaties and agreements recognise
unsustainable fishing practices as a major global issue1 and there
is a growing response taking place to encourage the transition
to sustainability in multiple regions. This effort is primarily (although
not exclusively) being coordinated and undertaken by NGOs
1. For example, major
agreements include
the UN Code of Conduct
for Responsible Fisheries
and the UN International
Plan of Action for the
Management of Fishing
Capacity. Key treaties
include the UN
Convention on the
Law of the Sea and UN
Agreement on Straddling
and Highly Migratory
Fish Stocks, and many
activities are also carried
out through regional
treaties.
11
and governmental and intergovernmental organisations that have
developed extensive knowledge around the types of intervention
that are needed to establish sustainable fisheries. It is, however,
clear that regulation and governance alone cannot solve the global
issue of fisheries sustainability (McClurg, 2014).
The transition to sustainable fisheries will not only prevent the
further deterioration of fish stocks, it can also help global fisheries
reset to a higher, more productive and more profitable level.
Research indicates that the global harvest from wild caught fish
could be up to 40% higher and that global fish abundance could
increase by 50% if sustainable management were introduced
and marine capture fisheries were allowed to recover (Costello
et al., 2012). According to The World Bank (2010), global fisheries
could be worth an additional US$50 billion annually. In other
words, the upside benefit of sustainable fisheries is huge and
should be considered a ‘no-regrets option.’
The investment case
Fisheries transition, in many ways, displays similar traits to those
of a classic investment turnaround: the upfront costs of transition
are offset by the profits that are generated through more efficient
and productive fisheries with higher harvests and lower costs.
In other words, there is a real return on investment to be had.
The state of global food markets offers a strong case for both the
need for, and potential returns from, the transition to sustainable
fisheries. Demand for seafood continues to grow, while supply
has been constrained, which has led to a substantial increase
in prices since the early 2000s – as can be seen in figure 1.
While a growing aquaculture industry can meet some of this
demand, marine fisheries still generate nearly 60% of fish sold
to consumers (EKO Asset Management Partners, 2014). There
will continue to be a large market for wild seafood, both to serve
basic food security needs in less developed countries and to serve
regions where a premium is placed on wild, sustainably caught
fish (World Bank, 2013). Investments that increase the supply
and sustainability of this commodity are, therefore, both necessary
and potentially profitable.
12
180
100
160
90
80
140
70
Fish price index
120
60
100
50
80
40
60
30
40
20
10
0
0
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
Global marine capture production (tonnes)
Fish price index – capture
Source: Tveterås et al, 2012 and FAO, 2014b
Fortunately, proven solutions and tools exist to turn around
all types of fisheries. Many case studies from around the world
(see table 1) indicate the upside associated with the transition
to sustainable fisheries and sustainable management.
Scoping studies have shown that for many fisheries, the increase
in overall profit that is generated through the transition process
is more than able to pay for the upfront costs of undergoing the
transition and for the on-going costs of sustainable management,
as well as provide a financial return for investors.
13
Marine capture production (millions of metric tonnes)
FIGURE 1 Price and supply of fish over time
TABLE 1 Increase in revenues in select fisheries
Fishery revenues
– before
Pacific halibut
fishery
Ben Tre clam
fishery
New Zealand’s
fisheries
US$77M (1992)
US$0.837M
(2007)
US$1,577M
(1986)
Investment
activities
Fishery revenues
– after
1995: Secure
tenure; Monitoring
and enforcement
US$248M (2008)
222%
2006 to 2009:
Secure tenure;
MSC certification
US$1.25M (2010)
49%
1986: Secure
tenure; Monitoring
and enforcement;
Sustainable
harvests
US$3,200M
(unkn)
Percent increase
103%
Sources: Tindall, 2012; MRAG, 2010
However, whilst the theory is strong, there have been some
clear barriers to using financial capital to drive the necessary
changes. These include the inability of project developers to
articulate and present an investment proposition; the lack of
organized entities that are able to receive investment and provide
payback mechanisms; and the limited ability of project developers
and investors to identify, mitigate and manage the idiosyncratic
risks associated with fisheries. To date, few projects have created
real investment propositions which clearly state the return on
investment and highlight the associated risks. At the same time,
projects focused on fisheries transition have not always included
the suite of activities that are necessary for generating and
protecting future economic potential.
The next two chapters attempt to highlight the enablers and
drivers of value increase around which an investable proposition
can be developed.
14
2
ENABLERS OF
INCREASED VALUE
15
MANY fisheries are underperforming assets that could generate
significantly more economic value, alongside significant social
and environmental benefits. First and foremost, fisheries must be
managed in a way that ensures environmental sustainability while
allowing the fishery to meet social and economic goals. Research
and experience highlight three key elements that must be in place
to enable a sustainable and financially-viable fishery:
1.
Secure tenure
2. Sustainable harvests
3. Robust monitoring and enforcement
These enabling conditions, which are described in more detail
below, provide the foundation from which stock recovery can be
successfully implemented and maintained and create a more stable
business environment for fishers to further improve their operations
and access to market. In addition, particularly in the case of secure
tenure, they also serve to catalyse an immediate increase in value
in the fishery overall.
Some fisheries will have none of these conditions in place, while
others may have only one or two. Furthermore, they may be poorly
designed and ineffectively implemented. In any case, projects
seeking to improve fisheries and generate a return for stakeholders
should be designed to introduce or strengthen these management
elements and investors should evaluate proposals based on the
ability for these conditions to be achieved.
See page 72 for glossary
and acronyms.
16
SECURE TENURE
Key actors
Since fish stocks are considered to be a public resource, governments
(national, regional and local) are responsible for establishing policies
for their management and play a primary role in the development
and implementation of secure tenure systems.
The private sector, specifically the fishing industry itself, can also play
a key role in designing, advocating for and administering a secure
tenure system. NGOs may support the process by providing technical
assistance and expertise.
Implementing secure tenure provides fishers with a long-term
vested interest in the health of the resource. It provides access
and exclusivity to secure, long-term returns, which are essential
for increasing the value of fisheries. Tenure systems allocate a secure
area or share of the catch to those who operate within the fishery
and whose business depends on the fish stocks (MRAG et al, 2009;
WWF, 2011; Bonzon et al, 2013). Secure tenure can be allocated
to groups of fishers, such as cooperatives, or individuals.
Establishing secure tenure is important because it changes fishers’
incentives. Overexploitation of fish stocks and the significant
lost value that results is primarily due to the dynamics of openaccess resources. Characterised as the ‘tragedy of the commons’
(Hardin, 1968), in an open-access fishery it is rational and profitable
in the short-term for fishers to remove more fish from the sea
than it is possible to replenish. As a result, over the long term
the available resource base declines and fishing activity becomes
increasingly marginal, until almost no economic benefit is derived
from it. On the other hand, secure tenure ties current behaviour
to future outcomes and incentivises fishers to invest in longterm sustainability.
In many cases the immediate economic impact of establishing
secure tenure can be dramatic. For example, the formation of
a fishing cooperative with a secure, area-based tenure system
known as TURFs (territorial use rights for fishing) in the Ben Tre
clam fishery in Vietnam allowed the local fishers to set harvest
limits for future benefit and achieve sustainability certification.
17
The value of this fishery increased by 49% in 3 years (Tindall, 2012).
In the Danish pelagic and demersal individual transferable quota
(ITQ) programme, fleet-wide profits increased as much as 20%
following establishment of secure tenure and fishers doubled their
investments in value-add activities (such as processing, filleting and
canning). Furthermore, a review of 15 fisheries in North America
showed an average 90% increase in revenue per vessel five years
after establishment of secure tenure (Grimm et al. 2012).
Well-implemented secure tenure requires that the conditions
are clearly defined and can only be revoked through a legitimate
process. This gives fishers the security to plan for the long-term,
and by extension gives investors the confidence to commit funds.
The process and corresponding rules for defining secure tenure
through access and use conditions can take many forms, as outlined
in box 1. Having secure tenure is fundamental to reducing the
risk of investment in fisheries. For an investment in the transition
to sustainable fisheries to generate a return, it is essential that all
actors are incentivised to operate according to the transition plan
over the length of the project lifetime. Secure tenure establishes
the appropriate incentives and helps achieve long-term stakeholder
engagement by the fishing industry.
18
BOX 1 Resources for establishing secure tenure
There are several resources available for establishing secure
tenure. These resources, which are applicable to a variety of
different fisheries and address a diversity of stakeholder goals,
are commented on in this section, and full references can be
found at the end of this report.
Secure tenure encompasses many systems of management and
is often referred to as rights-based management or catch shares.
According to EDF’s Catch Share Design Manual (2013) a catch share
program “allocates a secure area or privilege to harvest a share of
a fishery’s total catch to an individual or group. Programs establish
appropriate controls on fishing mortality and hold participants
accountable.” Amongst the different systems of catch share are
individual transferable quota (ITQ), individual vessel quota (IVQ),
Cooperative catch shares and territorial use rights for fishing
(TURFs), each of which have specific advantages and limitations.
Other organisations that have highlighted the potential use of
secure tenure and provided guidance include WWF (WWF, 2011),
the World Fish Center (Andrew & Evans, 2009) and the European
Union (MRAG et al, 2009).
In addition, several organisations have created guidelines for the
establishment of secure tenure, either through legal frameworks
or voluntary guidelines. The latter has been covered in some
detail by the FAO, which produced voluntary guidelines for the
governance of tenure (including for fisheries) in 2012 and draft
guidance on applying secure tenure as it applies specifically
to fisheries in 2013 (FAO, 2012; FAO, 2013b).
19
SUSTAINABLE
HARVESTS
Key actors
Governments are usually responsible for ensuring that harvests
are sustainable and therefore have a primary responsibility for final
review and authorization of harvest controls. However there is
debate around who should be responsible for funding and collecting
data and recommending harvest levels.
In some cases, government takes on the responsibility for these
activities, which is considered useful in order to avoid potential
conflicts of interest. In other cases, the industry plays more of an
important role, particularly in the financing of stock assessments
and collection of data. For example, the fishers in the Chilean
loco fishery pay for their own stock assessments in order to make
the most informed business decisions (Tindall, 2012). NGOs may
also play an important role by providing resources and knowledge
to assist the process of setting sustainable harvests.
Compliance with appropriate controls on fishing mortality is a
vital component of a sustainable fishery and requires limiting catch
to a level that promotes sustainable exploitation of the resource
and allows for stock recovery, if needed, or the maintenance
of stock health if the fishery is already at target biomass levels.
A sustainable harvest plan is primarily based on the current health
of the population and the biology of the fish species. Setting
sustainable harvests relies on data collection, analysis, modelling
and interpretation of the results, which in turn will require upfront
and ongoing investment.
Understanding the health of the stock, and therefore the expected
productive output of a fishery over time is key for investors, as
well as managers and fishers. At minimum, to enable the creation
of a sustainable business plan, data on fishery landings or on the
fish populations themselves need to be collected. Fortunately,
the process of data collection and stock assessment is itself wellestablished and clear guidance on collecting and processing data
has been produced by the FAO and others (see box 2).
20
BOX 2 Resources for determining sustainable harvests
Assessing the status and productivity of fish stocks is crucial
to determining long-term sustainable harvests and avoiding
overfishing. However, many fisheries lack formal scientific
assessments; one study suggests that 80% of landed catch comes
from unassessed species (Costello et al., 2012). Such assessments
are often not performed due to two obstacles: the cost of these
assessments and the lack of historical data records (Apel, Fujita
and Karr, 2013). Fortunately, the recent development of “datalimited methods” has reduced the cost and data requirement of
determining sustainable harvests. A number of reports have been
written describing these approaches and providing guidance on
their use. These publications are commented on in this section,
and full references can be found at the end of this report.
In some cases, resources and data for determining stock status
will not be constrained and a formal stock assessment can be
performed. Governments often employ fishery scientists for
this purpose. It is common for academics or private sector
businesses to perform stock assessments for a fee, and while some
organisations, such as EAF-Nansen2, may undertake full stock
assessments pro bono, it is exceedingly rare. Two guides to formal
stock assessment have been provided by the FAO (Cadima, 2003
and Hoggarth et al., 2006).
For fisheries with fewer resources available to collect and interpret
fisheries data, alternative assessment methodologies have been
developed in recent years. EDF’s Science-Based Management
of Data-Limited Fisheries (2013) report describes a number of
effective methods for data-limited situations, while providing
a framework for selecting an appropriate approach. Other
resources provide more detailed summaries and examples of the
application of data-limited approaches (California Sea Grant, 2008;
Honey et al., 2010; FAO, 2014c). New methods are developing
rapidly, further expanding the availability of options to determine
sustainable harvests (for an example see Costello et al., 2012).
2. For more information,
please see www.eafnansen.org/nansen/en
21
A robust stock assessment is the best method for understanding
stock status and setting harvest levels, but assessments have
traditionally been costly and required significant amounts of data.
Many fisheries around the world have little reliable data or money
for science. New cost-effective methods for approximating stock
status when data is limited are being developed (Apel, Fujita & Karr,
2013) and may be a good starting point for many fisheries.
Given its importance, data availability and reliability also has an
effect on investment risk. Fisheries that have accurate, appropriate
data will reduce levels of uncertainty and therefore increase
investor confidence. Uncertainty in stock data and assessments
is always a concern because factors such as the growth rates
of a specific stock, the carrying capacity for that stock and the
environmental variability brought on by seasonal changes or human
interference are inherently uncertain. Clearly, this uncertainty is
pronounced for data-limited fisheries (Honey et al, 2010). The cost
of extra data collection and analysis should be weighed against the
degree to which uncertainty will be reduced.
22
ROBUST
MONITORING AND
ENFORCEMENT
Key actors
The public sector has a key role in establishing policy that defines
legal and illegal fishing activity. The public sector may also play a
direct role by financing and providing monitoring and enforcement
activities. Increasingly, the private sector is playing a role in
providing information to ensure compliance with rules, especially
in fisheries with secure tenure. For example, fishery cooperatives
or associations may establish monitoring protocols for their members
and pay for monitoring.
In some cases, the roles and responsibilities of monitoring and
enforcement are shared, even if only informally, between public
and private entities. A good example of this is in the Patagonian
and Antarctic toothfish fishery, where collaboration between
governments, the industry and NGOs was necessary to tackle
illegal, unregulated and unreported (IUU) activity (Tindall, 2012).
Though these collaborative approaches can remain informal,
clearly defining roles to ensure that a transparent and robust
system is in place is vital to deterring unwanted fishing activity.
Effective monitoring and enforcement systems help ensure that
the value and cash flows generated from a productive fishery are
secure into the future. Systems must be in place to ensure legal
fishery participants comply with rules and regulations, such as
harvest limits, while also preventing illegal fishing activity from
those encroaching on the regulated sector.
Establishing secure tenure is an important step to providing fishers
with the right incentives to prevent or deter illegal, unregulated
and unreported (IUU) fishing. Secure tenure changes incentive
systems from within the fishery itself, such that incidence of illegal
or unreported fishing is naturally and cost-efficiently reduced.
Furthermore, fishers with secure tenure are more likely to support
systems that prevent outsiders from poaching their fish stocks,
23
as is the case in the Baja California lobster fishery where fishers
annually fund US$1 million in enforcement activities to protect their
resource against outsiders (Cunningham, 2013). However, in many
cases extra measures are also required.
IUU fishing activity is one of the most significant risks to sustainable
fisheries. Unfortunately, the global incidence of IUU fishing is
high, accounting for as much as US$23.5 billion annually across
EEZs and the high seas, at a mean loss of 18% of catch per fishery
(Agnew et al, 2009). There is therefore a clear incentive to enable
robust monitoring and enforcement and to reduce or eliminate
IUU activity.
Methods to prevent or restrict illegal fishing vary depending on
the size and situation of a fishery but there is generally a need for
both physical assets for monitoring and enforcement (such as patrol
boats) as well as the human capacity for effective control of a
fishery – both of which require upfront and ongoing investment.
Additionally, education and awareness-raising within local
communities on the importance of long-term sustainable
management can increase the degree of engagement with a
management plan and therefore reduce the risk of infraction.
A good example of this comes from Zanzibar’s Village Fishermen
Committees, where education programmes resulted in improved
fishery surveillance undertaken jointly by government and the
committees and eventually to a regeneration of marine resources
(Tindall, 2012).
From this, it is clear that ensuring robust monitoring and
enforcement will significantly reduce the risk of investment in
the transition, as it either reduces or eliminates existing IUU activity
and discourages any new IUU activity from starting.
24
3
DRIVERS OF
INCREASED VALUE
25
THERE are three key drivers that increase fishery value:
1.
3. Two common target
levels for sustainable
yields exist. Maximum
sustainable yield (MSY)
is the point where
the harvest from
the fishery is both
as high as possible
Stock health: The stock health determines the possible
harvest, or production level. When the stock is healthy
consistently larger harvests can be produced over the long
term. In cases where the stock is overfished, allowing fish
stocks to recover to a target level3 will ultimately result in
a higher, sustainable harvest.
2. Operational efficiency:4 Efficiency occurs at the fleet
level – including cooperatives and communities – and
the individual business level. These changes can take place
in both the catching sector as well as the rest of the supply
chain. Changes in management and/or individual business
decisions—such as better use of existing resources, use of
fewer resources, installation of more efficient technologies,
or better organisational structures—can reduce costs and
lead to greater value.
and can be sustained
indefinitely with proper
management. Maximum
Economic Yield (MEY)
is the point where the
greatest sustainable
3. Market value: The value of a fishery product at market
determines the fleet or individual revenues. An improved
ability to access and serve the demands of seafood markets
can increase revenue.
profits are achieved and
usually results in slightly
lower harvests and a
larger number of fish in
the water. The primary
difference between MSY
and MEY is MEY factors
in the costs of fishing,
whereas MSY does not.
4. In fisheries
terminology, operational
efficiency is commonly
defined as catch-per-
The previous chapter explains how implementing the right incentive
and management systems in a fishery is a critical first step in
unlocking the value of the fishery. Further to this, fishers, whether
as individuals or cooperatives, have the ability and incentive
to improve the bottom-line of their businesses in a way that
contributes to the overall sustainability of the fishery. This chapter
outlines some of the ways that this can be done. Importantly, if
basic conditions described in the previous chapter are not in place,
any attempts to increase stock health, operational efficiency or
market value will likely be eroded and value will dissipate over time.
unit of effort, or CPUE,
where effort is defined
by a single fishery
input or combination
of fishery inputs. For
example, CPUE might
be described as the
catch per vessel-day.
See page 72 for glossary
and acronyms.
26
STOCK HEALTH
Key actors
The public and private sectors both have a role to play in ensuring
stock health.
The public sector can be responsible for establishing policies that
permit or directly implement the conditions that ensure a healthy
stock: secure tenure, sustainable harvest limits and effective
monitoring and enforcement. The public sector may also finance,
in full or in part, activities that support these conditions.
The private sector, in particular the catching sector, can be involved
in policy designs such that they incorporate fisher input as well as
play a role in financing, administering and operating management
systems that maintain stock health.
NGOs may support stock health with technical assistance to support
the design and implementation of enabling conditions.
The fish stock (or in the case of mixed fisheries, fish stocks)
is the natural capital base on which the value of the fishery
is built. A healthy stock that is fished at a sustainable level will
provide significant and ongoing value. On the other hand,
an overfished, collapsed or declining stock provides reduced
and diminishing value.
The health of the stock, broadly speaking, drives value in two
different ways: first, through the number of fish available for
sustainable harvest, and second, through the relationship between
this number and the costs required to find and catch the fish. If
the stock diminishes – there are less fish available to catch – fishing
likely requires more effort in terms of travel to fishing grounds and
time to search for fish.
The goal is to maintain the stock at a level that either maximizes
the amount of fish that can be removed on a sustainable, ongoing
basis (Maximum Sustainable Yield or MSY) or maximizes the value
of the fishery (Maximum Economic Yield or MEY, which factors in
the costs of fishing, produces a lower harvest than MSY and leaves
more fish in the water). See figure 2 for more information.
27
As discussed in the previous section, there are three key enabling
conditions that ensure a healthy stock: secure tenure, sustainable
harvest limits and effective monitoring and enforcement. There
are additional approaches which may help bolster stock health
and increase product value. One approach is an ‘ecosystem-based’
approach which recognises the importance of wider ecosystem
dynamics in determining the stock health. One important
component of this is the establishment of temporary or permanent
closed areas that protect important parts of the ecosystem.
For example, in the Spencer Gulf prawn fishery of South Australia
(Tindall, 2012), fishers activate rolling, temporary closures to help
to maintain the stock at a healthy level. In addition, restrictions
can be put in place around size or sex of landed fish. These
restrictions can help to keep productive parts of the stock in the
water, thereby ensuring future value of the fishery at the same time
as enhancing dock-side value. All of these measures can maintain
the sustainability and resilience of the stock, thereby increasing
the value of a fishery.
28
FIGURE 2 Stock health and the costs and revenues of fishing
Maximum sustainable yield
(MSY)
Maximum economic yield
Open access
(MEY)
b
Increasing level of catch / value of catch
c
a
Net economic profit
(MSY)
Net economic profit
(MEY)
c
b
Increasing fishing effort
Decreasing fish stock
Total cost of fishing
Total value of catch
Figure 2 depicts the costs and revenues of fishing for three
scenarios. The dark blue line shows the catching sector revenues
for sustained levels of fishing effort and the light blue line shows
the total catching sector costs of fishing. The difference between
the two lines is the economic profit from fishing. At high levels
of fishing effort, fish stocks are depleted, fishing costs are high
and values derived from fishing are low. At MSY, sustainable
harvests from a fishery are maximized, providing the most food
production on a sustained basis. At MEY, the economic value
of the fishery is maximized by accounting for both the revenues
and costs of fishing. Setting sustainable harvest limits at MSY
will maximize the amount of fish removed sustainably and
setting the catch limit at MEY will maximize the net economic
value of the fishery.
29
a
OPERATIONAL
EFFICIENCY
Key actors
The private sector is the primary group of actors concerned with
increasing operational efficiency as it is one of the key ways industry
can improve the bottom line of a fishery’s economic performance.
The public sector can also impact operational efficiencies by
implementing policies that provide fishers with business flexibility
while ensuring compliance with appropriate standards.
NGOs may play an important role in linking operational efficiency
with the broader context of fishery sustainability.
Improving the operational efficiency of a fishery includes any
activity that reduces the cost of fishing or delivering seafood
through the supply chain. Increasing efficiency and overall profit
margins will improve the return on investment (ROI) of the
transition process as a whole. Historically, improving efficiency
in the absence of a robust management framework has led to
increased catch and stock depletion. However, in the context of
the overall transition, increasing margins for fishers is an important
component of economic sustainability.
5. WWF SmartGear
competition:
www.worldwildlife.org/
initiatives/international-
To a certain extent, the elements of the transition framework
discussed thus far will improve the bottom line of fishing activity.
When fishers have the stability of a long-term share of the fishery
and when the fish stock is healthy and resilient, fishers attain the
flexibility to make business decisions that can maximize operational
efficiency. For example, fishers can deploy improved fishing
gear that is better suited to the target species, more effective at
eliminating non-target species, or more fuel efficient. Technical
improvements resulting in reductions in non-target catch often have
downstream efficiency gains too, requiring less time and effort to
process and sort the fish that has been caught. In the New England
groundfish fishery for example, the introduction of t